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Appendix D.9 BPMS License and Support Agreement Employer Reporting Application Project

July 21, 2015 Page 1 of 80 DRS RFP 16-01

BPMS LICENSE AND SUPPORT AGREEMENT

BY AND BETWEEN

WASHINGTON STATE DEPARTMENT OF RETIREMENT SYSTEMS

AND

[BPMS SOLUTION PROVIDER]

___________, 2016

Employer Reporting Application Project

Appendix D.9 BPMS License and Support Agreement


TABLE OF CONTENTS

PAGE RECITALS .......................................................................................................... 7 ARTICLE 1 SCOPE OF AGREEMENT, PARTNERING PRINCIPLES AND RELATIONSHIP MANAGEMENT ........................................... 8 1.1 Scope of Agreement .......................................................................... 8 1.2 Partnering Principles .......................................................................... 8 1.3 Relationship Management.................................................................. 10

1.3.1 General .................................................................................. 10 1.3.2 Executive Sponsors ................................................................ 10 1.3.3 Executive Briefings ................................................................. 10 1.3.4 BPMS Vendor Account Executive ........................................... 10 1.3.5 BPMS Vendor Contract Manager ........................................... 10 1.3.6 Compliance with DRS Security Policies and Procedures, BPMS Vendor Information Security Officer, and Security Certifications ........................................................................... 11

1.4 Conflicts in Interpretation ................................................................... 12 1.5 Definitions and Construction .............................................................. 13 1.6 BPMS Vendor Agreements ................................................................ 13

ARTICLE 2 ORDERING DOCUMENTS ................................................................ 13 2.1 Ordering Documents .......................................................................... 13 2.2 Effectiveness of Ordering Documents ................................................ 14 ARTICLE 3 SOLUTION, DELIVERABLES AND TOOLS AND UTILITIES ........... 14

3.1 Solution License ................................................................................. 14 3.1.1 Solution License Grant of License ....................................... 14 3.1.2 Construction and Interpretation of License and Right to Use Terms ............................................................................ 14 3.1.3 Restrictions............................................................................. 15 3.2 Documentation ................................................................................... 15

3.2.1 General .................................................................................. 15 3.2.2 Additional Documentation ....................................................... 15 3.3 Performance and Other Tools, Utilities, Etc. ....................................... 15 3.4 Integrations, Interfaces, Extensions and Other Software-Based Deliverables ....................................................................................... 16

3.4.1 Development of Integrations, Interfaces, Extensions and Other Software-Based Deliverables ..................................... 16 3.4.2 Cooperation on Integrations and Interfaces ............................ 16

3.5 Technical Assistance and Knowledge Transfer .................................. 16 3.6 Source Code ...................................................................................... 17 3.6.1 Source Code Escrow Agreement ............................................ 17 3.6.2 Source Code License ............................................................. 18 3.7 DRS Participation in Product Development ........................................ 18

3.7.1 Advisory Council ..................................................................... 18 3.7.3 Early Adopter Status ............................................................... 18 3.7.4 Development Participation ...................................................... 19




ARTICLE 4 SUPPORT AND MAINTENANCE ...................................................... 19 4.1 General .............................................................................................. 19

4.2 Technical User Satisfaction Surveys .................................................. 19 ARTICLE 5 PRICING AND PAYMENT TERMS ...................................................... 19 5.1 Solution Fees ..................................................................................... 19

5.1.1 Solution License Fees ............................................................ 19 5.1.2 Support and Maintenance Services Fees ............................... 19 5.1.3 Service Rates ......................................................................... 20

5.2 Payment of Invoices ........................................................................... 20 5.2.1 General .................................................................................. 20 5.2.2 DRS Billing Practices and Payment Structures ....................... 21 5.2.3 Timeliness and Accuracy of Invoices ...................................... 21 5.2.4 Payment and Disputes ........................................................... 21 5.2.5 Small Business, Minority and Womens Business Enterprise (MWBE) and Veteran-Owned Business Participation ............. 22

5.3 Travel and Out-of-Pocket Expenses ................................................... 22 5.4 Set-Off Rights .................................................................................... 22 5.5 Taxes ................................................................................................. 22

ARTICLE 6 REPRESENTATIONS, WARRANTIES AND COVENANTS .............. 23 6.1 Functionality and Performance Warranties ......................................... 23 6.1.1 Solution Functionality ............................................................. 23 6.1.2 Solution Performance ............................................................. 23

6.1.3 Demonstrations ...................................................................... 24 6.1.4 Certification of Third Party Equipment and Software ............... 24

6.1.5 Solution Design Limitations .................................................... 25 6.1.6 Disabling Codes ..................................................................... 25 6.1.7 Exclusions .............................................................................. 25

6.1.8 Correction of Failure to Meet Functionality and Performance Warranties ....................................................... 25

6.2 Services Warranty .............................................................................. 25 6.3 Open Systems Warranty and Covenants ........................................... 26 6.4 Third Party and Mobile Warranties ..................................................... 26

6.5 Intellectual Property Warranty ............................................................ 26 6.6 Warranty of Authority ......................................................................... 26 6.7 Warranty of Title ................................................................................. 27 6.8 Pending Litigation Warranty ............................................................... 27 6.9 Offshoring .......................................................................................... 27 6.10 State Data .......................................................................................... 27 6.11 Conflicts of Interest ............................................................................ 27 6.12 Compliance with Federal and State Programs ................................... 28 6.13 Additional Representations and Warranties ....................................... 29 6.14 Material Misstatements or Omissions ................................................. 29 6.15 Disclaimer of Representations and Warranties ................................... 29 ARTICLE 7 TERM AND TERMINATION .............................................................. 29 7.1 Term .................................................................................................. 29 7.1.1 Term of Agreement ................................................................. 29




7.1.2 Term of Ordering Documents ................................................. 29 7.1.3 Termination for Convenience .................................................. 29 7.1.4 Termination Due to Insufficient Funding ................................. 30

7.1.5 Survival .................................................................................. 30 7.2 Events of Default ................................................................................ 31 7.3 Rights and Remedies of BPMS Vendor Upon an Event of Default of DRS ............................................................................................. 32 7.4 Rights and Remedies of DRS Upon an Event of Default of BPMS Vendor .................................................................................. 32 7.5 Transition Services............................................................................. 33 ARTICLE 8 LIMITATIONS ON LIABILITY ............................................................ 34 8.1 Cap on Damages .................................................................................... 34 8.2 Exclusions from Limitations on Liability .............................................. 34 8.3 Restoration of Liability Cap ................................................................ 34 8.4 Costs of Cure ..................................................................................... 35 ARTICLE 9 DATA RIGHTS, CONFIDENTIALITY AND SECURITY ..................... 35 9.1 Ownership of and Access to Data ...................................................... 35 9.2 Confidential Information ..................................................................... 35 9.2.1 Uses of Confidential Information ............................................. 35 9.2.2 Safeguarding Confidential Information .................................... 35 9.2.3 Disclosures of Confidential Information ................................... 35 9.3 Public Records Disclosures ................................................................ 36

9.4 Legally Required Disclosures ............................................................. 37 9.5 Notification and Mitigation .................................................................. 37

9.6 Return of Confidential Information ...................................................... 37 9.7 Security .............................................................................................. 38

9.7.1 Data Security Program ........................................................... 38 9.7.2 Security Breaches .................................................................. 38 9.7.3 Personal Information and Data Breach Notification Laws ....... 38

9.8 HIPAA ............................................................................................... 39 9.9 Survival .............................................................................................. 39 ARTICLE 10 INDEMNIFICATION ........................................................................... 39 10.1 General .............................................................................................. 39 10.2 Infringement ....................................................................................... 39 10.3 Industrial Insurance Immunity Waiver ................................................ 40 10.4 Procedures for Indemnification ........................................................... 40 10.4.1 General .................................................................................. 40 10.4.2 Defense .................................................................................. 40 10.4.3 Settlement of Claims .............................................................. 40 10.5 Survival; No Limitations on Liability .................................................... 40 ARTICLE 11 DISPUTE RESOLUTION ................................................................... 40 11.1 Administrative-Level Performance Review ......................................... 40 11.2 Executive-Level Performance Review ................................................ 41 11.3 Voluntary, Non-Binding Mediation ...................................................... 41 11.4 Redress in Court; Injunctive Relief ..................................................... 41 11.5 Continued Performance; No Tolling of Cure Periods .......................... 41




ARTICLE 12 MISCELLANEOUS ............................................................................ 41 12.1 Notices ............................................................................................... 41 12.2 Audits and Requests for Records ....................................................... 42

12.2.1 Financial Audits ...................................................................... 42 12.2.2 Solution Usage Confirmation .................................................. 42 12.2.3 Operational and Security Audits by DRS ................................ 43 12.2.4 Washington State Audits ........................................................ 43 12.2.5 Resolutions of Disagreements with Audits .............................. 43 12.2.6 Maintenance of Records ......................................................... 44

12.3 Insurance ........................................................................................... 44 12.3.1 Required Coverages ............................................................... 44 12.3.2 Additional Insureds and Evidence of Coverage ...................... 44 12.3.3 Claims-Made Coverage .......................................................... 45 12.3.4 Notice of Cancellation ............................................................. 45 12.3.5 Subcontractor Insurance......................................................... 45 12.3.6 Worker's Compensation Coverage ......................................... 45

12.4 Approval of Service Subcontractors ................................................... 45 12.5 Force Majeure .................................................................................... 46 12.6 Notice of Financial Impacts ................................................................ 46 12.7 Bankruptcy ......................................................................................... 47 12.8 Agency ............................................................................................... 47 12.9 Severability ........................................................................................ 47 12.10 Waiver; Waiver of Non-Competition ................................................... 47 12.11 Governing Law; Exclusive Jurisdiction ............................................... 48 12.12 Binding Nature and No Assignment ................................................... 48 12.13 Counterparts ...................................................................................... 48 12.14 Public Announcements ...................................................................... 48 12.15 DRS Policies ...................................................................................... 48 12.16 Compliance with Laws; Compliance with Civil Rights ......................... 49 12.17 Waiver of UCITA ................................................................................ 49 12.18 Binding, Irrevocable Offer .................................................................. 49 12.19 No Construction Against Drafter ......................................................... 49 12.20 Attorneys Fees .................................................................................. 49 12.21 Security Interest ................................................................................. 50 12.22 Entire Agreement; Modifications......................................................... 50



July 21, 2015 Page vi of 80 DRS RFP 16-01

SCHEDULES AND EXHIBITS

SCHEDULES Schedule 1.5 Definitions Schedule 4.1 Support and Maintenance Services

Attachment A Multi-Vendor Sourcing Procedures Attachment B Support Standards and Support Credits

Schedule 5.1.3 Service Rates Schedule 5.2.1 Form of BPMS Vendor Invoice Schedule 12.3.1 Insurance Coverages Schedule 12.15 DRS Policies

EXHIBITS Exhibit 1 BPMS Ordering Document Exhibit 2 Subcontractor Confidentiality and Non-Disclosure Agreement Exhibit 3 Third Party Confidentiality and Non-Disclosure Agreement Exhibit 4 Source Code Escrow Agreement




BPMS LICENSE AND SUPPORT AGREEMENT

This BPMS License and Support Agreement ("Agreement") is made and entered into as

of ______________, 2016 (the "Effective Date"), by and between the Washington State Depart-ment of Retirement Systems, an agency of the state of Washington, with a principal place of business at 6835 Capital Boulevard SE, Tumwater, Washington 98504 ("DRS"), and _____________________, a _______ corporation, with a principal place of business at _________________________________ ("BPMS Vendor").

WHEREAS, on July 21, 2015, DRS issued a request for proposals ("ERA RFP") to provide

support and maintain a Business Process Management Suite Solution ("BPMS Solution"), and to develop the Employer Reporting Application ("ERA") (the implementation of the BPMS Solution and development of the ERA are referred to as the "ERA Project") (each of which above defined terms are further defined herein).

WHEREAS, on Sept 1, 2016, ________________ ("Prime Vendor") submitted to DRS its written response to the ERA RFP, as subsequently supplemented (the "ERA RFP Response", as further defined herein), and in the ERA RFP Response and otherwise Prime Vendor repre-sented to DRS that Prime Vendor and/or BPMS Vendor had the solutions and support and mainte-nance services required to meet the requirements set forth in the ERA RFP and in the Agreement. WHEREAS, BPMS Vendor separately reviewed the ERA RFP, and prior to Prime Vendor submitting the ERA RFP Response, those portions of the ERA RFP Response relating to the BPMS Solution. Further, prior to submitting the ERA RFP Response, BPMS Vendor worked with Prime Vendor to ensure that the DRS Business Process and Technical Requirements can be met with BPMS Vendor's solution, and BPMS Vendor had sufficient time and opportunity during the implementation planning study workshops and otherwise, to conduct comprehensive due dili-gence on the ERA Project.

WHEREAS, BPMS Vendor acknowledges that, in reliance on the representations made by Prime Vendor and BPMS Vendor in the procurement, including BPMS Vendor's participation with Prime Vendor during the implementation study workshops, negotiations and otherwise, the Demonstrations, presentations to DRS and the commitments and assurances made by BPMS Vendor herein, DRS selected Prime Vendor using BPMS Vendor as the BPMS Solution provider over other prospective providers for the ERA Project. WHEREAS, DRS and BPMS Vendor want to specify the terms and conditions under which BPMS Vendor will provide the solution for the ERA Project, and for any future software licensed and/or provided to DRS by BPMS Vendor. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to the foregoing and as follows:




ARTICLE 1 SCOPE OF AGREEMENT, PARTNERING PRINCIPLES

AND RELATIONSHIP MANAGEMENT

1.1 Scope of Agreement. The Agreement shall apply to all Solutions and Support and Maintenance Services and other Services, as applicable, provided by BPMS Vendor to DRS, including the licensing of new or additional products as may be contracted for by the parties fol-lowing the Effective Date, which shall all be subject to all applicable Washington state laws and policies related to competitive procurement.

1.2 Partnering Principles. The principles identified below ("Partnering Principles")

include principles that the parties have determined to be important to ensure the success of their relationship. The Partnering Principles function as a guideline regarding the parties overall in-tentions for the Agreement and all Ordering Documents executed pursuant to the Agreement. If any term or condition of the Agreement or any Ordering Document is ambiguous or unclear or if the parties did not anticipate a particular issue, the parties shall refer to and apply the Partnering Principles to resolve and/or address the ambiguous, unclear and/or unanticipated issue.

PARTNERING PRINCIPLE #1 DIRECT SENIOR EXECUTIVE OVERSIGHT

In a long-term strategic business relationship, direct senior executive oversight and involvement by the parties is needed to ensure all commitments and timeframes are met.

PARTNERING PRINCIPLE #2 STATE-OF-THE-ART PRODUCTS

DRS will be making a significant investment in the products and services to be provided by BPMS Vendor, and DRS wants to ensure that BPMS Vendor remains a competitive solution provider. BPMS Vendor commits that the products provided to DRS shall be technologically competitive as measured against other commercially available products of the same types.

PARTNERING PRINCIPLE #3 COMPETITIVE PRICING AND PREDICTABILITY OF ON-GOING COSTS AND EXPENSES

Products and Services provided to DRS by BPMS Vendor must be competitively priced. Costs and expenses must be predictable, clearly articulated, and understood by the parties prior to initiating a project or any change orders. Cost, personnel and other resource requirements must be clearly outlined for all parties.




PARTNERING PRINCIPLE #4 DECISION MAKING AUTHORITY

While ultimate decision making authority for implementations and project-related items rest with DRS, BPMS Vendor must manage its personnel and subcontractors, and discharge its duties within the agreed parameters and requirements to ensure projects are successfully imple-mented.

PARTNERING PRINCIPLE #5 TIME-TO-MARKET SOLUTIONS

In a long-term technology relationship, time-to-market for products is critical to DRS. BPMS Vendor must ensure performance on a timely basis and deliver and implement fully tested and operational products.

PARTNERING PRINCIPLE #6 QUALITY PERSONNEL TO SUPPORT THE RELATIONSHIP

Qualified personnel will be devoted by the parties to the relationship. The parties will commit their senior executives and management, as well as administrative, technical and other support personnel, to achieve the objectives of the relationship.

PARTNERING PRINCIPLE #7 OPEN ARCHITECTURE ENVIRONMENT

Products provided to DRS by BPMS Vendor will operate in an open architecture environment, and BPMS Vendor will make available to DRS all interfaces and supporting documentation spec-ifications to promote interoperability among DRS' other systems and devices.

PARTNERING PRINCIPLE #8 COOPERATION WITH DRS' OTHER TECHNOLOGY PARTNERS

Given the various technology platforms supporting DRS, joint planning, open communication, and cooperation and collaboration between DRS and all of its technology partners will be re-quired. As such, BPMS Vendor and its subcontractors, as necessary, will participate in these cooperative activities.

PARTNERING PRINCIPLE #9 ALIGNMENT OF ACCOUNTABILITY AND RESPONSIBILITY

Accountability and responsibility of roles will be aligned to ensure that each party is responsible for the aspects of a project or relationship that they control.




1.3 Relationship Management. The parties commit to proactive sponsorship of the relationship created under the Agreement, and to further the interests of the relationship, agree to the following:

1.3.1 General. Each party shall allocate appropriate, quality resources to fulfill the objectives of the relationship including, as appropriate and applicable, resources to fulfill the development and Support and Maintenance Services obligations set forth herein and in an Ordering Document. If either party believes that the other has not allocated sufficient resources, the matter will be brought to the attention of the Executive Sponsors for resolution.

1.3.2 Executive Sponsors. Each party shall designate a senior executive-level individual(s) (for DRS, the "DRS Executive Sponsor(s)," and for BPMS Vendor, the "BPMS Vendor Executive Sponsor," and each an "Executive Sponsor(s)") who will have overall responsibility for the relationship between the parties with respect to the re-lationship. The BPMS Vendor Executive Sponsor shall have full authority to act on behalf of BPMS Vendor with respect to all matters related to the Agreement. Each party may designate a new Executive Sponsor at any time by providing written notice thereof to the other party. If DRS determines that individual appointed by BPMS Vendor is not fulfilling the goals of the relationship, DRS shall communicate that determination to BPMS Vendor, and BPMS Vendor shall replace such individual with an individual that both parties agree is suitable to fulfill the BPMS Vendor Executive Sponsor role. The BPMS Vendor Execu-tive Sponsors participation as sponsor of the relationship shall not be chargeable to DRS.

1.3.3 Executive Briefings. The relationship with BPMS Vendor will involve a

significant investment and substantial commitment from DRS in the form of monies, per-sonnel, time and effort. During the pendency of the ERA Project, the Executive Sponsors and other appropriate representatives from each party shall meet at least quarterly, or more frequently if needed, to discuss the overall relationship of the parties, the status of the ERA Project, the status of and any risks, issues and any problems or difficulties relat-ing to the ERA Project and/or Services, whether timeframes are being met, and what ac-tions BPMS Vendor can take to mitigate such risks, issues, problems or difficulties.

1.3.4 BPMS Vendor Account Executive. BPMS Vendor shall designate an in-

dividual (the "BPMS Vendor Account Executive") to serve as BPMS Vendors regular point of contact to administer the Agreement and any projects, oversee the delivery of Solutions, Equipment (if any) and Services to DRS and the overall performance of BPMS Vendors responsibilities under the Agreement and any Ordering Documents. The BPMS Vendor Account Executive shall attend all executive briefings. If DRS perceives that the BPMS Vendor Account Executive is not effectively discharging her or his duties, at DRS' request, BPMS Vendor shall replace such individual. BPMS Vendor shall not charge DRS for any Services, meeting time, etc., provided by the BPMS Vendor Account Executive.

1.3.5 BPMS Vendor Contract Manager. BPMS Vendor shall designate an in-

dividual (the "BPMS Vendor Contract Manager") to be responsible primarily for ensuring BPMS Vendors contractual compliance with the Agreement to ensure such compliance. In furtherance thereof, the BPMS Vendor Contract Manager shall, among other things:




(a) Be fully knowledgeable about all the commitments made by BPMS Vendor in the Agreement and Ordering Documents, especially where such com-mitments may differ from BPMS Vendors general business practices and policies;

(b) Advise BPMS Vendor personnel and BPMS Vendors subcontrac-

tors on the commitments made by BPMS Vendor to ensure BPMS Vendor person-nel have a full and complete understanding of the level and scope of the commit-ments made under the Agreement, Ordering Documents;

(c) Along with the BPMS Vendor Account Executive, serve as a point

of contact to administer the Agreement; (d) Ensure that all policies and procedures relating to BPMS Vendors

administration of the Agreement are applied consistently by BPMS Vendor; and (e) Such other duties or responsibilities relating to the administration of

the Agreement as may be reasonably requested from time-to-time by either party. 1.3.6 Compliance with DRS Security Policies and Procedures, BPMS Ven-

dor Information Security Officer, and Security Certifications.

(a) Compliance with Security Policies and Procedures. BPMS Vendor shall comply with: (i) security requirements and obligations required by ap-plicable Law; (ii) DRS Security Policies and Procedures; (iii) the then-current ISO (International Organization for Standardization) and IEC (International Electrotech-nical Commission) ISO/IEC 27000 series of Information Security Management Systems standards [DRAFTING NOTE: IF BPMS VENDOR DOES NOT COM-PLY WITH THIS PARTICULAR STANDARD, INSERT APPROPRIATE STAND-ARD REFERENCE]; and (iv) BPMS Vendor's security standards, policies, guide-lines and procedures, provided that DRS Security Policies and Procedures shall take precedence over any inconsistencies or conflicts with BPMS Vendor's secu-rity standards, polices, guidelines and procedures (subsections (i) through (iv) are collectively referred to as the "Security Policies and Procedures"). If there is a change in the Security Policies and Procedures from and after the Effective Date that BPMS Vendor determines increases its costs to provide Services or Sup-port and Maintenance Services, BPMS Vendor may submit a Change Request detailing BPMS Vendor's reasonable increased costs to comply with such change. DRS will evaluate the Change Request and either sign a Change Order paying the amounts set forth therein, whereupon BPMS Vendor shall comply with the change in the Security Policies and Procedures, or waive BPMS Vendor's obligation to comply with such change. The BPMS Vendor Information Security Officer's par-ticipation shall not be chargeable to DRS.

(b) BPMS Vendor Information Security Officer Responsibilities.

BPMS Vendor shall designate a corporate officer ("Information Security Officer") who shall, at no cost or expense to DRS:

(i) Be responsible to ensure BPMS Vendor's initial and on-go-

ing compliance with the Security Policies and Procedures;




(ii) Upon DRS' request, an officer of BPMS Vendor shall pro-

vide a written certification to DRS, confirming BPMS Vendor's compliance with the Security Policies and Procedures; and

(iii) Upon DRS' request, including following any certification re-

lated to BPMS Vendor's compliance with the Security Policies and Proce-dures, meet with State of Washingtons Security Program Representatives to discuss BPMS Vendor's certification, the Security Policies and Proce-dures or other related matters.

The BPMS Vendor Information Security Officer's participation shall not be charge-able to DRS.

(c) Security Certifications. [DRAFTING NOTE: REVISE IF BPMS

VENDOR IS NOT CERTIFIED UNDER ISO OR OTHER APPLICABLE STAND-ARD; RETAIN BALANCE OF PARAGRAPH RELATING TO RECEIPT OF AU-DIT RESULTS AND REMEDIATION OBLIGATIONS] BPMS Vendor represents and warrants to DRS that BPMS Vendor is certified under ISO (International Or-ganization for Standardization) and IEC (International Electrotechnical Commis-sion) ISO/IEC 27000, series of Information Security Management Systems stand-ards ("ISO Security Standards"), and BPMS Vendor shall maintain such certifi-cations on an on-going basis. BPMS Vendor shall provide DRS with a copy of such certifications upon request. BPMS Vendor shall provide DRS with full and complete copies of any ISO Security Standards audits and reviews, and other se-curity audits, reports and reviews, whether conducted internally by BPMS Vendor or through a Third Party, within five (5) days of a request by DRS and within twenty (20) days of BPMS Vendor's receipt of such audits, reports and reviews. If there are deficiencies cited and/or recommendations made, the BPMS Vendor Infor-mation Security Officer, the BPMS Vendor Executive Sponsor and other appropri-ate personnel from BPMS Vendor shall meet to review the deficiencies and rec-ommendations and develop a plan of action to address such items. The imple-mentation of any measures to address deficiencies and/or recommendations shall not be chargeable to DRS.

1.4 Conflicts in Interpretation. In resolving any inconsistencies relating to the Agree-

ment, the following order of precedence shall be followed:

(a) First, and most senior, applicable Laws; (b) Second, the terms contained in the main body of the Agreement; (c) Third, the terms contained in any Schedules to the Agreement, provided

that no order of precedence shall be given among them; (d) Fourth, the terms contained in any Exhibit to the Agreement (except for an

Ordering Document), provided that no order of precedence shall be given among them; (e) Fifth, the terms contained in the main body of an Ordering Document;




(f) Sixth, the terms contained in any Schedule, Exhibit and/or Attachment to

an Ordering Document, provided that no order of precedence shall be given among them; (g) Seventh, any RFP Response or response to other written materials re-

questing BPMS Vendor's bid, and any verbal responses made during recorded negotiation sessions; and

(h) Eighth, any Documentation (to the extent not included in one of the preced-

ing subsections) in the order of precedence contained in the definition thereof.

All RFP Responses, including the ERA RFP Response with respect to the BPMS Solution, are incorporated in by reference and made a part of the Agreement.

1.5 Definitions and Construction. Capitalized terms used herein shall have the

meanings ascribed to them in the Agreement, in Schedule 1.5, or in any other Schedule, Exhibit or Attachment. The words "include", "including" and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words "without limitation". Any reference herein to a particular Article or Section number (e.g., "Article 7" or "Section 7.1"), shall be deemed a reference to all Sections of the Agreement that bear sub-numbers to the number of the referenced in the Article or Section (e.g., a reference to Article 6 includes Sections 6.1 through 6.15, and a reference to Section 9.7 includes reference to Sections 9.7.1, 9.7.2, etc.). The terms "hereof," "hereunder," "herein" and words of similar import will refer to the Agreement as a whole and not to any particular provision of the Agreement. Definitions in the Agreement apply equally to the singular and plural forms of the defined terms. Unless otherwise expressly specified, all references to "days" without any designation of "calendar" or "business" will be deemed to be references to calendar days and not business days. All references to "business days" shall mean Monday through Friday, excluding Holidays. When calculating the time period before which, within which or following which any act is to be done or step taken pursuant to the Agreement, the date that is referenced in calculating such period will be excluded (for example, if an action is to be taken within two (2) days of a triggering event and such event occurs on a Tuesday then the action must be taken by Thursday). If the last day of a business day period is a non-business day, the period in question will end on the next succeeding business day.

1.6 BPMS Vendor Agreements. Following the Effective Date, if BPMS Vendor ac-

quires a new Affiliate and such new Affiliate is a party to one (1) or more agreements with DRS, DRS has the right, but not the obligation, to subject the products, software and services set forth in such Affiliate agreement to the terms of the Agreement, as set forth herein. Within thirty (30) days following DRS' written notice to BPMS Vendor that such Affiliate agreement products and services will be subject to the terms of the Agreement. Without limiting the generality of the fore-going, any such preexisting agreements shall be deemed merged into this Agreement and this Agreement shall control.

ARTICLE 2 ORDERING DOCUMENTS

2.1 Ordering Documents. DRS shall license Solutions, purchase Support and

Maintenance Services and purchase development, consulting and other Services as may be




agreed to between the parties pursuant to the terms of an ordering document (an "Ordering Document "). The BPMS Ordering Document is attached as Exhibit 1. Future Ordering Docu-ments developed by the parties shall use the BPMS Ordering Document as a framework for cre-ating the new Ordering Document, and shall set forth such additional terms and conditions that are not contrary to or inconsistent with the terms of the Agreement. Additional terms may relate to additional technical consulting, testing solutions, developing additional Integrations, Interfaces and Extensions, and the like. Any future Ordering Documents shall be subject to all applicable Washington state laws and policies related to competitive procurement (including RCW 39.26.120).

2.2 Effectiveness of Ordering Documents. Each Ordering Document shall require a

work authorization, duly authorized and signed by either the DRS Director or designee in order to create a binding obligation on DRS. BPMS Vendor acknowledges that DRS is not obligated under the Agreement to issue any Ordering Documents.

ARTICLE 3 SOLUTIONS, DELIVERABLES AND TOOLS AND UTILITIES

3.1 Solution License

3.1.1 Solution License Grant of License. [DRAFTING NOTE: TERMS OF LICENSE MAY BE ADJUSTED DEPENDING ON THE FINAL PROPOSED LICENSING MODEL SELECTED] Subject to further terms and conditions of the Agreement, BPMS Vendor and/or its subcontractors grant to DRS and its Affiliates a perpetual, non-exclusive, non-transferable (except as permitted under the terms set forth in Section 12.12), unlim-ited use, user and user type in connection with its business operations, non-assessable, irrevocable (except as provided in the last paragraph of Section 7.3), worldwide, fully paid (once all then-applicable Solution License Fees relating to the particular software item have been paid), multi-site and Enterprise-Wide license for DRS, its Affiliates and their Authorized Users to: (a) use the Solution and the Documentation; (b) at no additional So-lution License Fee, to transfer and operate the Solution on a different operating system and/or on different equipment; and (c) make as many production and non-production cop-ies of the Solution as DRS deems necessary, including for training and education, devel-opment and archiving. For purposes of the Agreement and without limiting the generality of the foregoing, the term Enterprise-Wide shall mean the right to use the Solution across the entire spectrum of business and operational activities involving DRS and its Affiliates, now and in the future, directly or indirectly, including any and all growth of DRS and its Affiliates.

3.1.2 Construction and Interpretation of License and Right to Use Terms.

BPMS Vendor acknowledges that the intent of the scope of the Solution license is to make DRS' rights to use the Solution as broad as possible and, accordingly, the language in Section 3.1.1 shall not be interpreted strictly or narrowly in favor of BPMS Vendor. Fur-thermore, if BPMS Vendor develops future limitations, qualifications and/or restrictions in how it licenses the Solution to its customers, such future limitations, qualifications and/or restrictions shall have no effect on the scope of the Solution license granted herein to DRS, and BPMS Vendor expressly disclaims the right to claim otherwise.




3.1.3 Restrictions. Other than the rights granted to DRS herein, no Intellectual Property Rights to the Solution are transferred to DRS under the Agreement. DRS shall not disassemble, reverse compile, reverse engineer or otherwise translate the Solution; provided, however, that DRS shall have the right to use the Solution for purposes of cre-ating Interfaces.

3.2 Documentation.

3.2.1 General. For each component of a Solution, BPMS Vendor shall provide to DRS Documentation that is reasonably detailed and complete and that accurately describes the functional and operational characteristics of the Solution. BPMS Vendor shall provide to DRS updated versions of all such Documentation as soon as reasonably practical following its release by BPMS Vendor, but in no event later than ten (10) business days following delivery of any Enhancements to DRS. Updated Documentation will be at least as detailed as the Documentation issued to DRS with any initial Solution delivery. The date, version and/or release number of each and every item of Documentation that is applicable to a par-ticular Solution will be specified in the applicable Ordering Document. For any Interfaces and Extensions and other software-based Deliverables, the Interface and Extension software shall internally document in the source code, instructions and pointers on how the Interface or Extension operates, and replicates such instructions and pointers in separate written Doc-umentation. The level of detail required for Interface Documentation shall be sufficient to enable a reasonably skilled programmer to update, retrofit and/or integrate the Delivera-bles to future versions and releases of the Solution or other computer programs to which the Interface interfaces or Extension operates.

3.2.2 Additional Documentation. BPMS Vendors Documentation shall include

detailed user-level descriptions of the changes in a release and the impact of such changes, detailed, comprehensive and complete technical release notes that identify all changes in a release and/or Enhancement. BPMS Vendor agrees to continually work to improve and enhance the level of detail contained in its Documentation.

3.3 Performance and Other Tools, Utilities, Etc. BPMS Vendor shall grant to or

acquire for DRS a royalty-free license during the term of the Agreement to all BPMS Vendor (or its Affiliates or subcontractors)-owned utilities and tools used by BPMS Vendor to provide Ser-vices and/or in connection with a project, and, to the extent such licenses are sub-licensable by BPMS Vendor to DRS, a license to Third Party-owned utilities and tools used by BPMS Vendor to provide Services and/or in connection with a project, including all tools and utilities used by BPMS Vendor to provide project management, implementation, evaluation and operational, maintenance and support Services, and all tools and utilities used by BPMS Vendor to provide performance monitoring, testing, managing and support of the Solution (collectively, "BPMS Ven-dor Tools and Utilities"). BPMS Vendor shall provide training and education on the use of the BPMS Vendor Tools and Utilities. The BPMS Vendor Tools and Utilities shall be set forth in the applicable Ordering Document. For so long as the Agreement is not terminated and BPMS Ven-dor is providing Support and Maintenance Services to DRS, BPMS Vendor shall provide updated versions and/or all new BPMS Vendor Tools and Utilities as such updated versions are available, all at no additional cost to DRS.




3.4 Integrations, Interfaces, Extensions and Other Software-Based Deliverables.

3.4.1 Development of Integrations, Interfaces, Extensions and Other Soft-ware-Based Deliverables. From time-to-time, BPMS Vendor and DRS may agree to de-velop Integrations, Interfaces, Extensions and other software-based Deliverables, which agreement shall be memorialized pursuant to an Ordering Document. The Ordering Docu-ment shall specify the ownership rights, if any, as between DRS and BPMS Vendor, and any additional Support and Maintenance Services Fees for such developments. If no ownership rights are specified in such Ordering Document, ownership shall vest with BPMS Vendor, provided that DRS shall have a perpetual, unlimited, royalty-free, Enterprise-Wide license to such Integrations, Interfaces, Extensions or other software-based Deliverables. Custom-de-veloped Integrations, Interfaces, Extensions and/or other software-based Deliverables shall be considered a Deliverable for purposes of the Agreement. With respect to each such In-tegration, Interface, Extension and other software- based Deliverable, BPMS Vendor shall provide to DRS the Documentation for all such Integrations, Interfaces, Extensions and soft-ware-based Deliverables, including, as applicable, API documentation, record layouts, de-sign documentation, functional specifications, technical specifications, data transformations and data aggregations. DRS shall not be obligated to make and shall be excused from mak-ing any final payment due to BPMS Vendor for such development items until all such Docu-mentation is received and accepted by DRS. BPMS Vendor shall make available to DRS for purchase at the additional Support and Maintenance Services Fees as specified in the Or-dering Document on an annual basis Support and Maintenance Services for any Integration, Interface, Extension and/or other software-based Deliverable, which Support and Mainte-nance Services shall include retrofitting, installing, implementing and maintaining the com-patibility of such Integration, Interface, Extension and/or software-based Deliverable to and with all Enhancements.

3.4.2 Cooperation on Integrations and Interfaces. BPMS Vendor acknowl-edges that DRS is working with a number of Third Parties to develop, maintain and support various DRS systems and that it may be necessary to implement one or more Integrations and Interfaces between and among a Solution and such systems. BPMS Vendor shall co-operate and work with DRS and such Third Parties, as applicable, to implement and use standard Integrations and Interfaces or develop and implement custom developed Integra-tions and Interfaces, in accordance with the terms of this Section, as necessary to allow information to pass from DRS' systems to the Solution, and vice-versa. Such cooperation may include, among other things, BPMS Vendors attendance at meetings with DRS person-nel and/or Third Parties and making available to DRS and Third Parties BPMS Vendor's API specifications, data schemas and other Documentation required for the development of the Integrations and Interfaces. BPMS Vendor shall attend DRS-requested telephonic meetings upon two (2) business days notice by DRS and DRS-requested in-person meetings at DRS upon four (4) business days notice by DRS. All such cooperation and meeting participation provided by BPMS Vendor during the pendency of or in connection with any project concern-ing the implementation of a Solution (by BPMS Vendor or a Third Party) shall be at no addi-tional cost or expense to DRS. 3.5 Technical Assistance and Knowledge Transfer. BPMS Vendor shall transfer

any knowledge it possesses which is needed or necessary for the day-to-day operation of the Solution to DRS employees and contractors designated by DRS so that DRS will be able to self-




configure, operate and support the Solution on a going forward basis ("Knowledge"). The trans-fer of Knowledge shall consist of BPMS Vendor instructing, educating and training DRS with respect to the following as they relate to the Solution, and configurations, Integrations, Interfaces, Extensions and other software-based Deliverables:

(a) The Solution, its configurations, and any Integrations, Interfaces, Exten-sions and other software-based Deliverables;

(b) Enhancements of the Solution; (c) All data files, file and data definitions and relationships, data definition

specifications, data models, program and logic, Interfaces, algorithms, program architec-ture, design concepts, system designs, program structure, sequence and organization, screen displays and report layouts;

(d) All available maintenance and support tools, utilities, diagnostic programs and supporting programs utilized by BPMS Vendor in the support and maintenance of the Solution, Integrations, Interfaces, Extensions and other software-based Deliverables;

(e) Documentation;

(f) Security requirements and methodologies implemented under the terms of the Agreement to prevent or detect unauthorized access, and any networking security tools;

(g) Methodologies that address traffic management, workload balancing, seg-mentation, routing and overall network performance analysis;

(h) The installation and maintenance of tools to support network performance analysis;

(i) Management and troubleshooting, including how to install and utilize man-agement and remote troubleshooting tools;

(j) Maximizing the use of the Solution, Integrations, Interfaces, Extensions and other software-based Deliverables to perform key operational functions, including data backups, program downloads and security checks and how to automate such functions to minimize manual intervention; and

(k) Any and all updated, changed or revised policies, practices, procedures,

processes and/or techniques with respect to the Knowledge previously transferred to DRS hereunder. 3.6 Source Code.

3.6.1 Source Code Escrow Agreement. The Source Code and other Deposit Materials for all Solutions licensed to DRS hereunder shall be deposited in escrow to be located in the United States. The escrow deposits shall be subject to release, all in ac-cordance with the terms and conditions of the Source Code Escrow Agreement. The




Source Code Escrow Agreement is supplementary to the Agreement. BPMS Vendor shall make and cause to be made deposits of the Deposit Materials for the Source Code Escrow Agreement within thirty (30) days of the Effective Date. If BPMS Vendor fails to deposit all such Deposits within the initial thirty (30) day time period, and thereafter, within the time frames specified in the Source Code Escrow Agreement, provided such failure is not cured by BPMS Vendor within thirty (30) days following receipt of written notice of such failure, without limiting any other rights and remedies that may be available to DRS, DRS shall have the right to: (a) seek specific performance of the Deposit obligations in the Source Code Escrow Agreement, and BPMS Vendor hereby waives all defenses associated with such remedy; (b) withhold payment of any and all amounts then due or that may become due to BPMS Vendor or, if no fees are then due or will become due, then DRS shall be entitled to a credit in the amount of One Thousand Dollars ($1,000) per day until BPMS Vendor makes the deposits, which credit BPMS Vendor shall, at DRS' option, either pay directly to DRS or accrue and set-off against future amounts that will be payable; (c) obtain release of the Source Code and other Deposit Materials in accordance with the Source Code Escrow Agreement; and/or (d) terminate the Agreement for a BPMS Vendor Event of Default in accordance with Article 7.

3.6.2 Source Code License. Upon any release of the Deposits to DRS under

the Source Code Escrow Agreement, DRS shall have a perpetual, non-exclusive, non-transferable (except as permitted under the terms set forth in Section 12.12), unlimited user, non-assessable, irrevocable, worldwide, fully paid and multi-site license (and subli-cense with respect to Third Party Solutions) either directly or through a Third Party retained by DRS, to use, modify, adapt, execute, compile and create derivative works of the De-posits for DRS' internal use and uses consistent with the terms set forth in Section 3.1.1 in order to support and enable DRS' continued use of the Solution.

3.7 DRS Participation in Product Development.

3.7.1 Advisory Council. BPMS Vendor shall permit DRS to participate on

BPMS Vendors advisory or other councils and committees, including any of its "Technical Design Workshops" or similar advisory groups. If BPMS Vendor has any councils, com-mittees, retreats, "Technical Design Workshop" or other similar forums in which BPMS Vendors top tier customers are entitled to participate, DRS shall be granted participation rights on no less favorable terms as BPMS Vendors other top tier customers.

3.7.3 Early Adopter Status. From time-to-time, BPMS Vendor allows certain

customers to become "early adopters" of new, improved and/or emerging software prod-ucts ("Emerging Products"). BPMS Vendor shall advise DRS of any Emerging Products that relate to the Solution and, as appropriate, other BPMS Vendor products. DRS shall have the right to become an early adopter of any such Emerging Products, in which event the parties shall develop an Ordering Document that shall address, as appropriate: (a) fees, if any, to be paid to BPMS Vendor; (b) implementation, training, support and other related services associated with installing and operating the Emerging Product; and/or (c) any additional equipment required, on a loaner or other basis, to operate the Emerging Product.




3.7.4 Development Participation. BPMS Vendor will provide DRS with written notice of any features and functionality that are planned in new releases and versions generally within thirty (30) days, but no later than sixty (60) days, after BPMS Vendor first identifies such for a particular release or version.

ARTICLE 4 SUPPORT AND MAINTENANCE

4.1 General. BPMS Vendors obligations to support, enhance and maintain the Solu-

tion ("Support and Maintenance Services") are set forth in Schedule 4.1. Additional Support and Maintenance Services may be set forth in the applicable Ordering Document. Except as otherwise set forth in an Ordering Document, BPMS Vendors Support and Maintenance Services obligations with respect to the Solution shall commence on the date the applicable Ordering Doc-ument is signed and shall be made available to DRS commencing on the effective date of the Ordering Document and shall continue for the longer of: (a) fifteen (15) years from the date of the applicable Ordering Document, subject to DRS maintaining currency with new Versions as set forth in Schedule 4.1; or (b) as long as BPMS Vendor makes support and maintenance services for the applicable Solution available to its customers generally (referred to as the "Minimum Available Support Term"). Subject to BPMS Vendors obligation to make available Support and Maintenance Services to DRS during the Minimum Available Support Term, BPMS Vendor shall have the right to discontinue Support and Maintenance Services for a Solution by providing DRS with two (2) years prior written notice of such discontinuation, but only if BPMS Vendor generally is discontinuing support and maintenance services for such Solution for all of its customer base.

4.2 Technical User Satisfaction Surveys. As part of BPMS Vendors annual ongo-

ing Support and Maintenance Services, BPMS Vendor shall develop one (1) or more technical user surveys designed to elicit feedback from DRS' technical support staff regarding their satis-faction with the Support and Maintenance Services provided by BPMS Vendor. Such technical user surveys shall be subject to DRS' prior review and approval.

ARTICLE 5 PRICING AND PAYMENT TERMS

5.1 Solution Fees.

5.1.1 Solution License Fees. The Solution license fees ("Solution License

Fees") and related payment terms for all Solutions licensed by DRS from BPMS Vendor pursuant to the Agreement shall be set forth in the applicable Ordering Document.

5.1.2 Support and Maintenance Services Fees. Support and Maintenance

Services Fees shall be set forth in the applicable Ordering Document. Unless other terms are set forth in the applicable Ordering Document, Support and Maintenance Services Fees: (a) shall be charged at a rate not greater than eighteen percent (18%) of the appli-cable discounted Solution License Fees; (b) shall commence one (1) year after delivery of the Solution; (c) shall be paid quarterly in arrears; and (d) may be increased by BPMS Vendor once annually commencing two (2) years after delivery of the Solution, provided that such annual increases shall not exceed CPI, with a cap of three percent (3%), in each case of the then-current Support and Maintenance Services Fees. Annual increases shall




not carry forward from one year to the next, meaning that if BPMS Vendor elects not to increase the Support and Maintenance Services Fees in one year by the full amount al-lowed hereunder, BPMS Vendor shall not have the right to carry forward such "unused" increase into subsequent years. DRS shall have the right to require BPMS Vendor to provide documentation substantiating the CPI calculations. If BPMS Vendor notifies DRS of a fee increase which exceeds the foregoing limits, then notwithstanding any prior pay-ment by DRS of invoices presented by BPMS Vendor, DRS shall be entitled to a refund or credit based on the actual increase that was permissible.

5.1.3 Service Rates. Fees for Services (other than Support and Maintenance

Services) shall be set forth in the applicable Ordering Document and the service rates set forth in Schedule 5.1.3 shall apply for all such Services acquired by DRS from BPMS Vendor (the "Service Rates"). The Service Rates may be increased by BPMS Vendor once annually commencing on the third (3rd) anniversary of the Effective Date; provided, however, that such annual increases shall not exceed CPI, with a cap of three percent (3%), in each case of the then-current Service Rates. Annual increases shall not carry forward from one year to the next, meaning that if BPMS Vendor elects not to increase the Services Rates in one year by the full amount allowed hereunder, BPMS Vendor shall not have the right to carry forward such "unused" increase into subsequent years. DRS shall have the right to require BPMS Vendor to provide documentation substantiating the percentage fee increase. If BPMS Vendor notifies DRS of a fee increase which exceeds the foregoing limits, then notwithstanding any prior payment by DRS of invoices presented by BPMS Vendor, DRS shall be entitled to a refund or credit based on the actual fee percentage increase that was permissible. In determining Service Rates for personnel, BPMS Vendor shall not differentiate Service Rates within a single job or personnel classi-fication, and if BPMS Vendors business practices now or in the future nonetheless make this distinction, BPMS Vendor shall use the lesser of the applicable rates. BPMS Vendor shall not increase a particular persons billing rate as a result of a promotion, change in job classification or otherwise without DRS' prior written consent, it being the understand-ing of the parties that DRS does not expect any rate changes during the course of a par-ticular project. Additionally, BPMS Vendor shall bill DRS in increments of one-quarter () hour for all professional or consulting Services provided, and shall not bill DRS for travel time unless, and only to the extent, permitted by then-current DRS Policies, including ap-plicable rules and regulations set forth in the Washington State Administrative and Ac-counting Manual, currently available at http://www.ofm.wa.gov/policy/10.htm.

5.2 Payment of Invoices.

5.2.1 General. BPMS Vendor shall issue all invoices promptly following the oc-currence of the invoicing events specified in the Agreement and/or in the applicable Or-dering Document, and all such invoices shall be directed to DRS for payment. The initial form of invoice to be used by BPMS Vendor is set forth in Schedule 5.2.1. In order for DRS to process invoices from BPMS Vendor for payment, each invoice from BPMS Ven-dor must include the items listed below. Failure to provide each of the items below, as applicable, on the invoice shall be grounds for rejecting the invoice and requiring BPMS Vendor to resubmit with such information. Receipt of the invoice by DRS shall be deemed to occur only when all of the applicable information below is set forth on the invoice. BPMS Vendor invoices shall include the following items, as applicable: The DRS BPMS License and Support Agreement number; BPMS Vendor's name, address, phone number and




Federal Tax Identification Number; a reasonably detailed description of the Services per-formed (including the date and hours worked) and/or Solution licensed, as applicable; price for each item, or BPMS Vendor's list price for each item and applicable discounts; applicable taxes, shipping costs, other applicable charges; total price; and payment terms including any available prompt payment discounts. If expenses are invoiced, BPMS Ven-dor must provide a detailed itemization of those expenses that are reimbursable, including description, amounts and dates. Any single expense in the amount of Fifty Dollars ($50) or more must be accompanied by a receipt in order to receive reimbursement. By sub-mitting an invoice, BPMS Vendor certifies that the amount billed is accurate with respect to the fees, charges and expenses set forth therein and that such fees, charges and ex-penses are allowed pursuant to the Agreement. All invoices shall be issued in U.S. Dol-lars, and payment shall be made by DRS in U.S. Dollars.

5.2.2 DRS Billing Practices and Payment Structures. BPMS Vendor shall

comply with DRS' standard billing practices, including providing supporting documentation as may be reasonably required to substantiate invoice amounts and the other require-ments of this Section. Except as may be otherwise set forth in an Ordering Document, and, as may be limited by applicable Law, DRS shall not make any payments to BPMS Vendor in advance for any Services or Equipment. Modifications to payment terms, in-cluding any adjustment to the payment of holdback amounts, shall require an amendment to the Ordering Document or a Change Order, as determined by DRS.

5.2.3 Timeliness and Accuracy of Invoices. BPMS Vendor acknowledges that

timeliness and accuracy of invoicing is a critical DRS business requirement, as BPMS Vendors failure to do so may adversely impact DRS' ability to encumber funds within the proper fiscal year. Accordingly, and without limiting the generality of the terms set forth in Sections 5.2.1 or 5.2.2, BPMS Vendor shall issue each invoice hereunder within sixty (60) days after the date on which BPMS Vendor was authorized by the terms of the Agree-ment and/or the applicable Ordering Document to issue such invoice to DRS (for each such invoice, the "Invoicing Deadline") and such invoice shall be accurate and correct. DRS shall notify BPMS Vendor of any inaccurate invoice, and BPMS Vendor shall re-submit an accurate invoice. DRS is not obligated to pay or partially pay any inaccurate invoices.

5.2.4 Payment and Disputes. The parties agree that within thirty (30) days fol-

lowing its receipt of the applicable invoice, DRS shall pay the invoice, provided that: (a) it was accurately and timely issued as provided in Sections 5.2.1 and 5.2.2; and (b) such invoice is not disputed by DRS in accordance with the further terms of this Section. BPMS Vendor shall accept electronic funds transfers as the form of payment. If an invoiced amount is disputed in good faith by DRS, then DRS promptly shall notify BPMS Vendor of the dispute and, until resolution of the dispute occurs pursuant to Article 11, DRS shall have the right to withhold and suspend disputed payments. All of the parties obligations under the Agreement shall continue unabated during the duration of the dispute resolution. If DRS claims that it has been inappropriately billed but it has already paid the disputed amount, the parties shall work to resolve the matter within ninety (90) days from the date of DRS' written notice of such overpayment, and each party shall provide the other with all relevant documentation in an effort to resolve the matter as quickly as possible. If BPMS Vendor determines that DRS was billed improperly, it promptly shall issue to DRS a credit memo that DRS can deduct on the next invoice billed.




5.2.5 Small Business, Minority and Womens Business Enterprise (MWBE)

and Veteran-Owned Business Participation. [DRAFTING NOTE: THIS SECTION AP-PLIES ONLY IF VENDORS IS A SMALL BUSINESS, MINORITY, WOMEN'S, OR VET-ERANS BUSINESS. IF NOT, THIS SECTION WILL BE DELETED.] With each invoice for payment and within thirty (30) days of DRS' request, BPMS Vendor shall provide DRS an affidavit of amounts paid. The affidavit of amounts paid shall either state that BPMS Vendor still meets the definition of small business vendor and/or maintains its MWBE and/or Veteran-Owned certification, or state that its subcontractor(s) still meets the defini-tion of small business and/or maintain(s) its/their MWBE and/or Veteran-Owned certifica-tion(s) and specify the amounts paid to each small business, certified MWBE or Veteran-Owned subcontractor under the Agreement. BPMS Vendor shall maintain records sup-porting the affidavit of amounts paid in accordance with Section 12.2.6.

5.3 Travel and Out-of-Pocket Expenses. BPMS Vendor shall be reimbursed for rea-

sonable staffing accommodation, living and travel expenses, in accordance with DRS Travel Pol-icies as set forth in Schedule 5.3. Travel and out-of-pocket expenses, if agreed to, may be sub-ject to a not-to-exceed or other agreed arrangement(s) as may be set forth in an Ordering Docu-ment. Travel and out-of-pocket expenses must be submitted with receipts and other required substantiating documentation in accordance with the DRS Policies within sixty (60) days from the date chargeable to DRS. Travel and out-of-pocket expenses that do not receive pre-approval by DRS will not be eligible for reimbursement.

5.4 Set-Off Rights. BPMS Vendor shall comply with DRS' billing practices relating to

the issuance of credit notes and/or memoranda relating to amounts due to DRS under this Agree-ment, including any credits and unresolved disputed amounts as described in Section 5.2. If BPMS Vendor fails to issue to DRS a credit note or memorandum on its next invoice to DRS for any amounts that become due to DRS in accordance with the above, then DRS shall have the right to set off such amounts against any amounts then due or that become due to BPMS Vendor under the Agreement. If DRS cannot effectuate a complete set-off due to insufficient amounts owed by DRS to BPMS Vendor, BPMS Vendor promptly shall refund unrealized set off amounts to DRS no later than twenty (20) days following its receipt of written notice from DRS requiring it to do so.

5.5 Taxes. DRS shall pay all sales and use taxes required under applicable Law.

BPMS Vendor must pay all other taxes, including the Washington Business and Occupation Tax, compensatory and other taxes based on BPMS Vendor's income or gross receipts, and personal property taxes levied or assessed on BPMS Vendor's personal property. BPMS Vendor shall include on each invoice a separate line item specifying the tax for each component of Service or the Solution. BPMS Vendor shall work with DRS to ensure that BPMS Vendor is properly deter-mining the amount of taxes under applicable Law associated with each type of Service or the Solution. DRS shall not be charged for any taxes levied or assessed on the income of BPMS Vendors employees such as IRS compensatory taxes. BPMS Vendor shall complete registration with the Washington State Department of Revenue and be responsible for payment of all taxes due on payments made under the Agreement. All payments accrued on account of payroll taxes, unemployment contributions, any other taxes, insurance, compensatory or other expenses for BPMS Vendor or BPMS Vendor's personnel shall be BPMS Vendor's sole responsibility. DRS reserves the right to require evidence of payment of such taxes prior to making any final payments due under an Ordering Document.




ARTICLE 6 REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1 Functionality and Performance Warranties.

6.1.1 Solution Functionality. BPMS Vendor represents and warrants to DRS

that: (a) the Solution shall possess all of the functional capabilities described in: (i) the DRS Business and Technical Requirements; and (ii) the Documentation; and (iii) shall perform all such functions described in subsections (i) and (ii) without any Level 1 De-fects or Level 2 Defects; (b) except as may be otherwise expressly set forth in an Ordering Document, the various components of the Solution: (i) are designed to and shall not require multiple user sign-ons and forced sign-offs within, across and among all product lines, includ-ing Solutions provided to DRS from and after the Effective Date; (ii) shall have the same "look and feel" within a product line; and (iii) either share a common database used across com-ponents of the Solution, or if there are multiple databases, the data among such databases is coordinated, synchronized or otherwise managed by the Solution without the need of a separate interface; and (c) to the extent the Solution has mobile features and/or using a mo-bile platform, the mobile component of the Solution complies with Mobile Standards. The terms of this Section are effective on the Effective Date and shall remain in effect with respect to particular Solution for as long as DRS pays for Support and Maintenance Ser-vices.

6.1.2 Solution Performance. BPMS Vendor represents and warrants to DRS

that the Solution shall meet or exceed the Performance Standards set forth in the appli-cable and all Ordering Document when operating in the operating environment described in the applicable and all Ordering Document (the "Approved Equipment Configura-tion"). The representations and warranties set forth in this Section shall remain in effect for as long as the Approved Equipment Configuration is not exceeded, and for as long as DRS continues to purchase Support and Maintenance Services. If: (a) the Approved Equipment Configuration has changed so that DRS is no longer operating the Solution within the Approved Equipment Configuration parameters; and (b) DRS wants to maintain the effectiveness of the Performance Standards with respect to the Solution, then BPMS Vendor shall make recommendations that are reasonably necessary to ensure that the Solution continues to operate in accordance with the Performance Standards while oper-ating within the re-established Approved Equipment Configuration, including that DRS purchase additional equipment and/or license additional software. If DRS implements such recommendations, the Performance Standards shall remain in effect for as long as the re-established Approved Equipment Configuration is not exceeded, after which the process described in this Section shall be repeated at DRS' request. Without limiting any other rights and remedies that may then be available to DRS, BPMS Vendor shall correct any failure of the Solution to operate in accordance with the performance warranties set forth in this Section by providing additional equipment, software or services to DRS at no additional cost to DRS. The terms of this Section shall apply so long as DRS is paying for Support and Maintenance Services and DRS has not made modifications (but excluding any configurations permitted by or made in accordance with the Documentation) to the Solution without the written consent of BPMS Vendor.




6.1.3 Demonstrations. BPMS Vendor represents and warrants to DRS that, for any Demonstrations provided to DRS in which a Solution was proposed, BPMS Vendor used only generally available versions and releases of the Solution when it developed the Demonstrations, including the use of actual file structures, APIs, layouts and screens; (b) the test data populated actual files and file structures used in the Solution to show the movement of data native in the system and was not simulated in (i.e., splashed into) tem-porary Excel or other files created to show features, functionality or information flows that are not present in the Solution; and did not use any tools, utilities, or other techniques to replicate or simulate any portion of the Solution.

6.1.4 Certification of Third Party Equipment and Software.

(a) General. If DRS acquires any Third Party software and/or equipment to operate with the Solution that has been previously recommended by BPMS Vendor or previously certified by BPMS Vendor (whether for DRS or any other customer of BPMS Vendor) then such software and/or equipment shall be deemed certified by BPMS Vendor for DRS' use and such use shall not affect the warranties set forth herein. If DRS acquires any Third Party software and/or equipment that has not been recommended by BPMS Vendor in a written configuration or previously certified by BPMS Vendor (whether for DRS or any other customer of BPMS Vendor), then DRS may submit such Third Party software and/or equipment for certification by BPMS Vendor in order to assure conformance with BPMS Vendors reasonable specifica-tions. Certification of Third Party software and/or equipment shall begin as soon as reasonably possible, but in no event later than ten (10) business days following DRS' request. Fees for certification Services provided by BPMS Vendor shall be charged at the Service Rates and limited to the reasonable time, materials and out-of-pocket expenses associated with such certification. Upon certification by BPMS Vendor, such Third Party software and/or equipment shall be deemed qualified to operate with the Solution without affecting the warranties set forth herein.

(b) Technical Alternatives. If BPMS Vendor determines that the Third

Party software and/or equipment cannot be certified, BPMS Vendor will provide DRS with a written explanation detailing the technical reasons why the software or equip-ment cannot be certified. If the technical issues are addressable in a commercially reasonable manner (such as acquiring technical proficiency in the technology to en-able certification to be achieved) and the parties can address such issues (or, in the case of DRS, DRS makes an offer to address the technical issue), then the certifica-tion will proceed and the software or equipment will be certified upon addressing the technical issues. If the parties determine that the technical issues cannot be reason-ably addressed then the parties shall work to develop a modified or alternative con-figuration or technology so that certification can proceed, and upon the adoption of such modification or alternative configuration or technology by DRS, BPMS Vendor will provide its certification.

(c) Retrofitting Previously Certified Technology. If DRS migrates to

a later release of a previously certified configuration or technology under this Section, at DRS' request, BPMS Vendor will provide technical assistance to DRS and/or re-certify the configuration or technology, all at the Service Rates.




6.1.5 Solution Design Limitations. Each Ordering Document involving the im-plementation of a Solution shall provide a representation and warranty regarding the de-sign limitations with respect to the Solution, including transaction volume throughput, field and record sizes, scalability and capacity limitations. The terms of this Section are effec-tive on the Effective Date and shall remain in effect with respect to particular Solution for as long as DRS is paying for Support and Maintenance Services.

6.1.6 Disabling Codes. BPMS Vendor represents and warrants to DRS that the

Solution and any Deliverable provided by BPMS Vendor do not contain and DRS shall not receive from any BPMS Vendor data transmission via the Internet, modem, tape or other BPMS Vendor-provided medium (including any connection to any BPMS Vendor web-site or bulletin board) any virus, worm, trap door, back door, timer, clock, counter, time lock, time bomb, Trojan horse, file infectors, malware, rootkits, boot sector infectors or other limiting routine, instruction or design including surveillance software or routines or data gathering or collecting software or devices that could, if triggered, erase data or programming, collect data in a surveillance or other capacity, have an adverse impact on the Solution, or cause the Solution or any component thereof to become inoperable or otherwise incapable, in whole or in part, of being used in the full manner for which the software was intended to be used (a "Disabling Code"). If BPMS Vendor introduces a Disabling Code, at its sole cost and expense, BPMS Vendor shall, as applicable: (a) take all steps necessary to test for the presence of Disabling Codes; (b) remove the Disabling Code; (c) install and implement a new copy of the Solution at DRS, if applicable, without the presence of the Disabling Code; (d) restore any and all data and programming lost by DRS as a result of such Disabling Code (such restoration shall include, if needed, on-site technical assistance to extract data from corrupted data files, restoration of backup media, data log analysis, and the like). This representation and warranty shall survive the expi-ration or termination of the Agreement.

6.1.7 Exclusions. BPMS Vendor shall not be responsible for a breach of the

representations and warranties set forth in Section 6.1 to the extent such breach is caused by: (a) if an express responsibility of DRS and not BPMS Vendor, DRS' failure to properly install and maintain the Solution, but only if BPMS Vendor has provided DRS with written notice of such failure; (b) any alterations of or additions to the Solution performed by a party other than BPMS Vendor or a Third Party not acting on BPMS Vendors behalf, at its direction or with its approval; or (c) use of the Solution in a configuration not set forth in the Documentation or an approved configuration.

6.1.8 Correction of Failure to Meet Functionality and Performance Warran-ties. Upon any failure to comply with the representations, warranties and/or covenants set forth in this Section, within the applicable time frames specified in Schedule 4.1, or within five (5) days if such time frames are not applicable to the breach, in each case following receipt of written notice from DRS of such failure, BPMS Vendor shall repair, replace or correct, at BPMS Vendors sole cost and expense, the applicable component(s) of the Solution, including by providing any additional software and/or services that may be necessary. The remedies set forth in this Section shall be in addition to any Credits and/or any other rights and remedies that may be available to DRS.

6.2 Services Warranty. BPMS Vendor represents and warrants to DRS that it shall

perform all Services in accordance with industry practices and standards generally applicable to




such Services; provided, however, that where the Agreement or an Ordering Document specifies a particular standard or criteria for performance, this warranty is not intended to and does not diminish such standard or criteria for performance.

6.3 Open Systems Warranty and Covenants. BPMS Vendor represents and war-rants to DRS that, as of the Effective Date, the Solution (including Integrations, Interfaces, Exten-sions and other software-based Deliverables) is Compliant with current versions of IEEE 802.3, 802.11(g/n)(wireless), industry standards for wave form transmissions ANSI X3T9.5 (FDDI Spec-ifications), EIA/TIA 568A (building wiring specifications), TCP/IP protocols, HTTP/HTTPs stand-ards and other standards that may be set forth in an Ordering Document. BPMS Vendor cove-nants that the Solution and future releases and version of the Solution shall be Compliant with such standards, as such standards are updated from time-to-time. For purposes of the Agree-ment, the term "Compliant" shall mean that the Solution is compatible with the applicable stand-ard and is able to utilize fully each and every feature and functionality of that release level without workarounds or additional programming. The representations and warranties set forth in this Section shall remain in effect for as long as the Agreement is not terminated.

6.4 Third Party and Mobile Warranties. BPMS Vendor represents and warrants to DRS that it has tested or shall have tested at the time of installation all Third Party Solutions supplied by BPMS Vendor to DRS and determined that such Third Party Solution meets the rep-resentations and warranties set forth in the Agreement and/or the applicable Ordering Document. With respect to mobile and/or Third Party components of the Solution, BPMS Vendor represents, warrants and covenants to DRS that State Data shall not be stored, collected, used in geolocation tracking services, or other uses inconsistent with DRS Policies, and that Third Party terms and conditions relating to the use of mobile devices are consistent with and do not violate any Laws, the Mobile Standards and/or DRS Policies. The representations and warranties set forth in this Section shall survive the expiration or termination of the Agreement.

6.5 Intellectual Property Warranty. BPMS Vendor represents and warrants to DRS

that, as of the Effective Date, and as of the effective date of each Ordering Document (except to the extent disclosed therein), the Solution and DRS' use of the Solution in accordance with the terms of the Agreement does not infringe upon any patent, trademark, copyright, trade secret or other intellectual property or proprietary right of any Third Party. BPMS Vendor further represents and warrants to DRS that, as of the Effective Date, and as of the effective date of each Ordering Document (except to the extent disclosed therein), there is, and there shall be, no actual or threat-ened suit against BPMS Vendor by any Third Party based on an alleged violation of any right specified in the preceding sentence. This representation and warranty shall survive the expiration or termination of the Agreement.

6.6 Warranty of Authority. Each party represents and warrants to the other that it

has the right to enter into the Agreement and, in the case of BPMS Vendor, as of the Effective Date and as of the effective date of each Ordering Document (except to the extent disclosed therein), there is not and there shall not be, any outstanding assignments, grants, licenses, en-cumbrances, obligations or agreements that relate to the Solution (whether written, oral or im-plied) that are inconsistent with the Agreement and the rights granted or transferred herein. This representation and warranty shall survive the expiration or termination of the Agreement.




6.7 Warranty of Title. BPMS Vendor represents and warrants to DRS that it has the full authority to provide, license or sublicense the Solution to DRS. This representation and war-ranty shall survive the expiration or termination of the Agreement.

6.8 Pending Litigation Warranty. BPMS Vendor represents and warrants to DRS that, as of the Effective Date and as of the effective date of each Ordering Document (except to the extent disclosed therein), there is (and there shall be at the time of a future Ordering Docu-ment), no action, suit, claim, investigation or proceeding pending, or the basis for any action, suit, investigation or proceeding, and to the best of BPMS Vendors knowledge, there is no action, suit, claim, investigation or proceeding, or the basis for any action, suit, investigation or proceeding, threatened against, by or affecting BPMS Vendor, its Affiliates or the Solution in any court, or by or before any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator of any kind that, if adversely determined, might affect BPMS Vendors ability to enter into the Agreement and/or the applicable Ordering Document and perform all of its obligations herein.

6.9 Offshoring. BPMS Vendor represents, warrants and covenants to DRS that

BPMS Vendor shall not: (a) except as may otherwise be set forth in an Ordering Document, perform any of its obligations under the Agreement from locations, or using employees, contrac-tors and/or agents, situated outside the United States; or (b) directly or indirectly (including through the use of subcontractors) trans